It’s earnings season. The key takeaway? Sales and earnings are growing once again after a multi-quarter contraction in 2016.
It’s a positive sign for stock market bulls.
Some key highlights:
- As of last night 30% (148 of 500) S&P 500 companies reported Q4 sales/earnings
- Aggregate year-over-year SALES growth = +2.4%
- Aggregate year-over-year EPS growth = +5.0%
- Financials (33 of 63 have reported year-over-year SALES and EPS growth of +4.0% and +8.7%, respectively)
- Tech (26 of 66 have reported year-over-year SALES and EPS growth of +6.6% and +13.2%, respectively)
- Basic Materials (8 of 29 have reported year-over-year SALES and EPS growth of +6.4% and +20.9%, respectively)
“[Earnings growth] is one of the many reasons why stocks have been crushing Gold and Bonds for the last 3 months,” writes Hedgeye CEO Keith McCullough in today’s Early Look. Over the past three months, the S&P 500 is up +7.9%, Gold is down -7% and 10-year Treasury yields are up +35%.
WHAT TO BUY
We think earnings growth continues to accelerate. That translates into outperformance in the following sectors, Financials (XLF), Tech (XLK), and Consumer Discretionary (XLY).
